Intrinsic value of KBR, Inc. - KBR

Previous Close

$25.83

  Intrinsic Value

$809.84

stock screener

  Rating & Target

str. buy

+999%

Previous close

$25.83

 
Intrinsic value

$809.84

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of KBR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 3.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  41.90
  38.21
  34.89
  31.90
  29.21
  26.79
  24.61
  22.65
  20.88
  19.30
  17.87
  16.58
  15.42
  14.38
  13.44
  12.60
  11.84
  11.15
  10.54
  9.98
  9.49
  9.04
  8.63
  8.27
  7.94
  7.65
  7.38
  7.15
  6.93
  6.74
Revenue, $m
  6,972
  9,635
  12,997
  17,143
  22,151
  28,085
  34,996
  42,923
  51,887
  61,899
  72,958
  85,054
  98,170
  112,287
  127,380
  143,426
  160,405
  178,296
  197,086
  216,764
  237,327
  258,775
  281,118
  304,367
  328,544
  353,675
  379,791
  406,929
  435,134
  464,454
Variable operating expenses, $m
  5,063
  6,930
  9,286
  12,191
  15,700
  19,858
  24,702
  30,256
  36,538
  43,554
  51,125
  59,601
  68,793
  78,685
  89,261
  100,506
  112,404
  124,941
  138,108
  151,897
  166,307
  181,337
  196,993
  213,285
  230,227
  247,837
  266,138
  285,155
  304,920
  325,466
Fixed operating expenses, $m
  942
  963
  984
  1,006
  1,028
  1,051
  1,074
  1,097
  1,121
  1,146
  1,171
  1,197
  1,223
  1,250
  1,278
  1,306
  1,335
  1,364
  1,394
  1,425
  1,456
  1,488
  1,521
  1,554
  1,589
  1,624
  1,659
  1,696
  1,733
  1,771
Total operating expenses, $m
  6,005
  7,893
  10,270
  13,197
  16,728
  20,909
  25,776
  31,353
  37,659
  44,700
  52,296
  60,798
  70,016
  79,935
  90,539
  101,812
  113,739
  126,305
  139,502
  153,322
  167,763
  182,825
  198,514
  214,839
  231,816
  249,461
  267,797
  286,851
  306,653
  327,237
Operating income, $m
  966
  1,742
  2,727
  3,946
  5,423
  7,176
  9,221
  11,569
  14,228
  17,199
  20,661
  24,255
  28,154
  32,352
  36,841
  41,614
  46,667
  51,991
  57,584
  63,442
  69,564
  75,951
  82,604
  89,528
  96,729
  104,214
  111,993
  120,078
  128,481
  137,217
EBITDA, $m
  1,192
  1,987
  2,995
  4,243
  5,754
  7,548
  9,641
  12,045
  14,765
  17,806
  21,167
  24,844
  28,834
  33,129
  37,723
  42,608
  47,777
  53,226
  58,949
  64,943
  71,208
  77,743
  84,551
  91,636
  99,004
  106,663
  114,624
  122,897
  131,495
  140,434
Interest expense (income), $m
  12
  94
  199
  335
  507
  719
  976
  1,279
  1,633
  2,038
  2,497
  3,009
  3,575
  4,194
  4,865
  5,587
  6,359
  7,180
  8,049
  8,964
  9,926
  10,932
  11,984
  13,082
  14,225
  15,414
  16,651
  17,937
  19,273
  20,661
  22,104
Earnings before tax, $m
  872
  1,543
  2,392
  3,439
  4,703
  6,200
  7,942
  9,936
  12,189
  14,702
  17,652
  20,680
  23,960
  27,487
  31,254
  35,255
  39,486
  43,942
  48,620
  53,517
  58,632
  63,966
  69,522
  75,303
  81,314
  87,563
  94,057
  100,805
  107,820
  115,113
Tax expense, $m
  235
  417
  646
  928
  1,270
  1,674
  2,144
  2,683
  3,291
  3,970
  4,766
  5,584
  6,469
  7,421
  8,438
  9,519
  10,661
  11,864
  13,127
  14,449
  15,831
  17,271
  18,771
  20,332
  21,955
  23,642
  25,395
  27,217
  29,111
  31,080
Net income, $m
  636
  1,127
  1,746
  2,510
  3,433
  4,526
  5,797
  7,254
  8,898
  10,732
  12,886
  15,097
  17,491
  20,065
  22,815
  25,736
  28,825
  32,078
  35,492
  39,067
  42,801
  46,695
  50,751
  54,971
  59,360
  63,921
  68,661
  73,588
  78,709
  84,032

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  7,195
  9,944
  13,413
  17,692
  22,859
  28,983
  36,116
  44,296
  53,547
  63,879
  75,292
  87,775
  101,311
  115,879
  131,455
  148,015
  165,536
  184,000
  203,391
  223,699
  244,919
  267,054
  290,111
  314,104
  339,055
  364,989
  391,941
  419,948
  449,055
  479,312
Adjusted assets (=assets-cash), $m
  7,195
  9,944
  13,413
  17,692
  22,859
  28,983
  36,116
  44,296
  53,547
  63,879
  75,292
  87,775
  101,311
  115,879
  131,455
  148,015
  165,536
  184,000
  203,391
  223,699
  244,919
  267,054
  290,111
  314,104
  339,055
  364,989
  391,941
  419,948
  449,055
  479,312
Revenue / Adjusted assets
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
Average production assets, $m
  1,241
  1,715
  2,313
  3,051
  3,943
  4,999
  6,229
  7,640
  9,236
  11,018
  12,986
  15,140
  17,474
  19,987
  22,674
  25,530
  28,552
  31,737
  35,081
  38,584
  42,244
  46,062
  50,039
  54,177
  58,481
  62,954
  67,603
  72,433
  77,454
  82,673
Working capital, $m
  -265
  -366
  -494
  -651
  -842
  -1,067
  -1,330
  -1,631
  -1,972
  -2,352
  -2,772
  -3,232
  -3,730
  -4,267
  -4,840
  -5,450
  -6,095
  -6,775
  -7,489
  -8,237
  -9,018
  -9,833
  -10,682
  -11,566
  -12,485
  -13,440
  -14,432
  -15,463
  -16,535
  -17,649
Total debt, $m
  2,655
  4,472
  6,765
  9,593
  13,009
  17,057
  21,772
  27,179
  33,293
  40,123
  47,667
  55,918
  64,866
  74,495
  84,791
  95,737
  107,319
  119,523
  132,340
  145,764
  159,791
  174,422
  189,662
  205,522
  222,014
  239,157
  256,972
  275,484
  294,724
  314,725
Total liabilities, $m
  4,756
  6,573
  8,866
  11,694
  15,110
  19,158
  23,873
  29,280
  35,394
  42,224
  49,768
  58,019
  66,967
  76,596
  86,892
  97,838
  109,420
  121,624
  134,441
  147,865
  161,892
  176,523
  191,763
  207,623
  224,115
  241,258
  259,073
  277,585
  296,825
  316,826
Total equity, $m
  2,439
  3,371
  4,547
  5,997
  7,749
  9,825
  12,243
  15,016
  18,152
  21,655
  25,524
  29,756
  34,344
  39,283
  44,563
  50,177
  56,117
  62,376
  68,950
  75,834
  83,028
  90,531
  98,348
  106,481
  114,940
  123,731
  132,868
  142,362
  152,230
  162,487
Total liabilities and equity, $m
  7,195
  9,944
  13,413
  17,691
  22,859
  28,983
  36,116
  44,296
  53,546
  63,879
  75,292
  87,775
  101,311
  115,879
  131,455
  148,015
  165,537
  184,000
  203,391
  223,699
  244,920
  267,054
  290,111
  314,104
  339,055
  364,989
  391,941
  419,947
  449,055
  479,313
Debt-to-equity ratio
  1.090
  1.330
  1.490
  1.600
  1.680
  1.740
  1.780
  1.810
  1.830
  1.850
  1.870
  1.880
  1.890
  1.900
  1.900
  1.910
  1.910
  1.920
  1.920
  1.920
  1.920
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.940
  1.940
  1.940
Adjusted equity ratio
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  636
  1,127
  1,746
  2,510
  3,433
  4,526
  5,797
  7,254
  8,898
  10,732
  12,886
  15,097
  17,491
  20,065
  22,815
  25,736
  28,825
  32,078
  35,492
  39,067
  42,801
  46,695
  50,751
  54,971
  59,360
  63,921
  68,661
  73,588
  78,709
  84,032
Depreciation, amort., depletion, $m
  226
  245
  268
  297
  332
  373
  420
  475
  537
  607
  505
  589
  680
  778
  882
  993
  1,111
  1,235
  1,365
  1,501
  1,644
  1,792
  1,947
  2,108
  2,276
  2,450
  2,630
  2,818
  3,014
  3,217
Funds from operations, $m
  863
  1,371
  2,014
  2,807
  3,765
  4,899
  6,218
  7,729
  9,436
  11,339
  13,391
  15,686
  18,171
  20,843
  23,697
  26,730
  29,936
  33,313
  36,857
  40,568
  44,445
  48,488
  52,698
  57,079
  61,635
  66,370
  71,292
  76,406
  81,722
  87,249
Change in working capital, $m
  -78
  -101
  -128
  -158
  -190
  -225
  -263
  -301
  -341
  -380
  -420
  -460
  -498
  -536
  -574
  -610
  -645
  -680
  -714
  -748
  -781
  -815
  -849
  -883
  -919
  -955
  -992
  -1,031
  -1,072
  -1,114
Cash from operations, $m
  941
  1,473
  2,142
  2,965
  3,955
  5,124
  6,480
  8,030
  9,776
  11,720
  13,812
  16,145
  18,669
  21,379
  24,271
  27,339
  30,581
  33,993
  37,571
  41,316
  45,226
  49,303
  53,547
  57,963
  62,554
  67,325
  72,284
  77,438
  82,794
  88,363
Maintenance CAPEX, $m
  -34
  -48
  -67
  -90
  -119
  -153
  -195
  -242
  -297
  -359
  -429
  -505
  -589
  -680
  -778
  -882
  -993
  -1,111
  -1,235
  -1,365
  -1,501
  -1,644
  -1,792
  -1,947
  -2,108
  -2,276
  -2,450
  -2,630
  -2,818
  -3,014
New CAPEX, $m
  -368
  -474
  -598
  -738
  -891
  -1,056
  -1,230
  -1,411
  -1,596
  -1,782
  -1,968
  -2,153
  -2,335
  -2,513
  -2,687
  -2,856
  -3,022
  -3,185
  -3,345
  -3,503
  -3,660
  -3,818
  -3,977
  -4,138
  -4,304
  -4,473
  -4,649
  -4,831
  -5,020
  -5,219
Cash from investing activities, $m
  -402
  -522
  -665
  -828
  -1,010
  -1,209
  -1,425
  -1,653
  -1,893
  -2,141
  -2,397
  -2,658
  -2,924
  -3,193
  -3,465
  -3,738
  -4,015
  -4,296
  -4,580
  -4,868
  -5,161
  -5,462
  -5,769
  -6,085
  -6,412
  -6,749
  -7,099
  -7,461
  -7,838
  -8,233
Free cash flow, $m
  539
  950
  1,477
  2,137
  2,945
  3,914
  5,056
  6,377
  7,883
  9,578
  11,414
  13,487
  15,745
  18,187
  20,807
  23,601
  26,566
  29,697
  32,992
  36,448
  40,065
  43,841
  47,778
  51,877
  56,142
  60,577
  65,186
  69,976
  74,955
  80,131
Issuance/(repayment) of debt, $m
  1,402
  1,817
  2,293
  2,828
  3,416
  4,048
  4,715
  5,407
  6,115
  6,830
  7,544
  8,251
  8,948
  9,629
  10,296
  10,946
  11,582
  12,205
  12,817
  13,423
  14,027
  14,631
  15,241
  15,860
  16,492
  17,143
  17,815
  18,513
  19,240
  20,000
Issuance/(repurchase) of shares, $m
  84
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,486
  1,817
  2,293
  2,828
  3,416
  4,048
  4,715
  5,407
  6,115
  6,830
  7,544
  8,251
  8,948
  9,629
  10,296
  10,946
  11,582
  12,205
  12,817
  13,423
  14,027
  14,631
  15,241
  15,860
  16,492
  17,143
  17,815
  18,513
  19,240
  20,000
Total cash flow (excl. dividends), $m
  2,025
  2,767
  3,770
  4,965
  6,361
  7,962
  9,770
  11,784
  13,998
  16,408
  18,958
  21,738
  24,693
  27,816
  31,102
  34,547
  38,147
  41,902
  45,809
  49,872
  54,092
  58,472
  63,019
  67,737
  72,634
  77,719
  83,001
  88,489
  94,195
  100,131
Retained Cash Flow (-), $m
  -721
  -932
  -1,176
  -1,450
  -1,752
  -2,076
  -2,418
  -2,773
  -3,136
  -3,503
  -3,869
  -4,232
  -4,589
  -4,939
  -5,280
  -5,614
  -5,940
  -6,259
  -6,573
  -6,884
  -7,194
  -7,504
  -7,816
  -8,134
  -8,458
  -8,792
  -9,136
  -9,494
  -9,867
  -10,257
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  1,304
  1,835
  2,594
  3,514
  4,609
  5,886
  7,352
  9,011
  10,862
  12,905
  15,089
  17,506
  20,104
  22,878
  25,822
  28,933
  32,208
  35,642
  39,236
  42,988
  46,898
  50,969
  55,202
  59,603
  64,176
  68,928
  73,864
  78,995
  84,328
  89,873
Discount rate, %
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
  1,244
  1,663
  2,222
  2,831
  3,471
  4,120
  4,752
  5,342
  5,863
  6,293
  6,592
  6,792
  6,862
  6,801
  6,615
  6,316
  5,919
  5,445
  4,916
  4,355
  3,783
  3,222
  2,689
  2,197
  1,757
  1,373
  1,049
  782
  568
  402
Current shareholders' claim on cash, %
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7
  97.7

KBR, Inc. is a provider of professional services and technologies across the asset and program life-cycle within the government services and hydrocarbons industries. The Company operates through business segments, including Technology & Consulting (T&C), Engineering & Construction (E&C), Government Services (GS), Non-strategic Business and Other. The T&C business segment combines KBR technologies, knowledge-based services and its three specialty consulting brands, Granherne, Energo and GVA, under a single customer-facing global business. The E&C business segment provides project and program delivery solution across the globe. The GS business segment provides life-cycle support solutions to defense, space, aviation and other programs and missions for government agencies in the United States, the United Kingdom and Australia. Its solutions include engineering services, mission and logistics support solutions, consulting, procurement, construction management and other support services.

FINANCIAL RATIOS  of  KBR, Inc. (KBR)

Valuation Ratios
P/E Ratio -60.5
Price to Sales 0.9
Price to Book 4.9
Price to Tangible Book
Price to Cash Flow 60.5
Price to Free Cash Flow 73.8
Growth Rates
Sales Growth Rate -16.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10%
Cap. Spend. - 3 Yr. Gr. Rate -32.4%
Financial Strength
Quick Ratio 60
Current Ratio 0.1
LT Debt to Equity 90.4%
Total Debt to Equity 91.5%
Interest Coverage 4
Management Effectiveness
Return On Assets -2.1%
Ret/ On Assets - 3 Yr. Avg. -7.6%
Return On Total Capital -4.7%
Ret/ On T. Cap. - 3 Yr. Avg. -18.9%
Return On Equity -6.7%
Return On Equity - 3 Yr. Avg. -20.2%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 2.6%
Gross Margin - 3 Yr. Avg. 2.7%
EBITDA Margin 2.1%
EBITDA Margin - 3 Yr. Avg. -0.6%
Operating Margin 0.7%
Oper. Margin - 3 Yr. Avg. -1.9%
Pre-Tax Margin 0.8%
Pre-Tax Margin - 3 Yr. Avg. -1.8%
Net Profit Margin -1.4%
Net Profit Margin - 3 Yr. Avg. -5.8%
Effective Tax Rate 254.5%
Eff/ Tax Rate - 3 Yr. Avg. 76%
Payout Ratio -75.4%

KBR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KBR stock intrinsic value calculation we used $4913 million for the last fiscal year's total revenue generated by KBR, Inc.. The default revenue input number comes from 0001 income statement of KBR, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KBR stock valuation model: a) initial revenue growth rate of 41.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.8%, whose default value for KBR is calculated based on our internal credit rating of KBR, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of KBR, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KBR stock the variable cost ratio is equal to 73.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $922 million in the base year in the intrinsic value calculation for KBR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7.5% for KBR, Inc..

Corporate tax rate of 27% is the nominal tax rate for KBR, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KBR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KBR are equal to 17.8%.

Life of production assets of 25.7 years is the average useful life of capital assets used in KBR, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KBR is equal to -3.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1718 million for KBR, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 141.207 million for KBR, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of KBR, Inc. at the current share price and the inputted number of shares is $3.6 billion.

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